TFSA Investors: 2 Unloved Dividend Stocks That Could Roar Back in 2023

Consider North West Company (TSX:NWC) and another defensive dividend play to weather a 2023 storm!

| More on:

Image source: Getty Images

Tax-Free Savings Account (TFSA) investors should at least think about doing some buying, with the 2022 bear market in full swing. Undoubtedly, this bear market could span more than a year. The bearish market strategists at the big banks seem to think there’s going to be more turmoil in the first half of 2023. In any case, self-guided investors should treat these near-term forecasts with a grain of salt.

Indeed, the folks at the big banks are very smart, and they may claim to have a pulse on the economy. Still, the stock market is unpredictable over the near to medium term. Anything can catch us off guard. And after a turbulent few years, many of us forget that surprising good news is still a possibility.

In 2023, TFSA investors should keep it simple and try to act contrarian when they can. While it’s hard to tell when markets will return in rally mode again, new investors should play both sides of the coin with defensive dividend stocks. These types of stocks can pay you whether or not next year sees pain, rather than gain.

In this piece, we’ll consider two intriguing low-correlation stocks (stocks that don’t tend to follow the TSX Index in either direction) that are trading at some pretty compelling valuations at the time of writing.

Consider rural grocer North West Company (TSX:NWC) and top-tier gold miner Barrick Gold (TSX:ABX).

North West Company

North West Company is a mid-cap discount retail play that few Canadians have ever heard of. The company primarily serves the remote northwest, which includes communities in Alaska, and various Canadian provinces. Undoubtedly, the $1.8 billion grocer is in great shape to ride out a downturn, given its competitive positioning and large grocery mix.

The stock trades at a mere 14.9 times trailing price to earnings (P/E). That’s pretty low for a consumer staple with a 4.03% dividend yield. Further, NWC stock can help your TFSA portfolio weather any further volatility hurricanes in 2023. With a 0.63 beta, NWC stock is considerably less volatile than the market averages.

Fresh off a modest third quarter that saw higher sales, I view NWC as a must-buy bargain for those seeking to play defence without having to pay up a premium valuation in what’s likely to be the late stages of a bear market.

Barrick Gold

Barrick Gold is one of the best ways to play gold. Of late, precious metals have been rallying fiercely. Shares of ABX are now up more than 26% from their November 2022 lows. As gold continues to move higher, I expect ABX stock will be in a spot to amplify such moves.

Like North West, Barrick sports a low beta (a mere 0.12 at writing) alongside a sound dividend (2.38% yield). A secure, growing dividend paired with less-correlated shares could make for a great hiding place if 2023 holds a recession that’s anything but mild.

Even if the next bull runs out of the gate, Barrick looks like too good a value play to pass up here now that analysts have muted expectations.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends North West. The Motley Fool has a disclosure policy.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »